REFILE-UPDATE 1-India's Life Insurance Corp open to taking part in IL&FS rights issue

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(Removes extra word in headline)

MUMBAI, Sept 28 (Reuters) - India’s Life Insurance Corporation (LIC), the largest shareholder in debt-ridden Infrastructure Leasing & Financial Services (IL&FS), is open to participating in a rights issue, the insurer’s chairman V.K. Sharma said on Friday.

IL&FS is a major Indian infrastructure finance and construction company, which has built up big debts and is now facing a credit crunch.

LIC, India’s largest state-run insurer, was open to all options to help rescue the firm, including participating in a rights issue, Sharma told reporters at the finance ministry on Friday.

The insurer might also look at raising its equity stake in IL&FS, subject to regulatory permission, Sharma said, adding that the value of assets of IL&FS was 600 billion rupees.

Sharma and Ranjish Kumar, chairman of State Bank of India, were at the ministry to meet India’s economic affairs secretary to discuss the IL&FS crisis, a source familiar with the matter said.

IL&FS’s other major shareholders include Japan’s Orix Corp and the Abu Dhabi Investment Authority up to the end of the financial year to March 2018, according to the company’s website. LIC held more than 25 percent at the end of March.

IL&FS is expected to hold its annual general meeting with shareholders and its board meeting on Saturday.

Separately, IL&FS Financial Services, a subsidiary of IL&FS, said it defaulted on commercial papers, a term loan and missed interest payments on non-convertible debentures all due on Friday.

On Thursday, the unit had said it missed repayments on a host of bank loans and some term deposits due this month.

$1 = 72.5050 Indian rupees
Reporting by Manoj Kumar in New Delhi and Abhirup Roy in
Mumbai. Editing by Jane Merriman and Elaine Hardcastle